Prime Minister John Key has hit back at Labour leader David Cunliffe after he suggested the Government should take a tougher stance over the rights of ex-pat Kiwis across the Tasman.

Up till 2001 New Zealanders across the Tasman had all the rights of citizenship, but the Australian Government stripped away most entitlements for any Kiwis - an estimated 200,000 - entering the country after that time.

Cunliffe said today it was time to address the fact that New Zealanders in Australia did not enjoy the same rights and privileges afforded to Australians living in New Zealand.

Key, visiting Australia, said: "Without labouring the point, this was an agreement that was [agreed] by the 2001 Labour government," Key said.

"I've seen David Cunliffe’s comments this morning, shame he didn’t issue that press release when Helen Clark was signing us up to this deal."

Key said he would be raising the issue and while he was not optimistic of an about-turn, he did believe there was room to make changes in some areas, such as student allowances.

The previous Australian government had proposed allowing access to student entitlements for the children of Kiwi ex-pats who had been in Australia for at least 10 years. Key said officials were continuing to work on those proposals.

“Obviously it’s pretty tight fiscal times in Australia at the moment so more ways of spending money on Kiwi students may not be top of the list, but we'll just try and keep the discussion going.”

Abbott has said he is happy with the current arrangement which leaves New Zealanders free to live and work in there.

But Cunliffe said today it was time to address the issue.

"Those New Zealanders contribute fully to Australian society, yet are treated like third-class citizens," he said.

Cunliffe said Key needed to make this more of a priority and stop using Australia's greater bargaining power as an excuse for not making any progress.

"The way to go into any negotiation between two sovereign parties is on the basis of mutual respect and equality and if you go into a negotiation assuming we are powerless that is how we will end up. I do not think it's the right way to start."